Another Upset in the Financial Sector

Editorial

Mauritius must take all the steps necessary so as to rectify the negative portrayal coming out of the MER-ESAMLG exercise, and restore the trust and confidence of African partners using all means at its disposal, so that there is no replay of the DTAA episode with India

Our financial sector is again in the news – apparently for the bad reasons. It has been cast in a negative light following the Mutual Evaluation Report (MER) done by the Secretariat of the Eastern and Southern Africa Anti-Money Laundering Group (ESAMLG), which is a regional body subscribing to global standards to combat money laundering and financing of terrorism and proliferation.

Financial Services and Good Governance Minister Seesungkur has objected to the Mutual Evaluation Report for the numerous incorrect facts and wrong conclusions therein. The Mauritian government has stated that the report must be withheld until such time as procedural impropriety and the concerns on the issue of quality and consistency are addressed. It would appear that the government would have also stated that the Financial intelligence Unit had not been sharing with law enforcement agencies and competent authorities strategic analysis on trends and patterns on money laundering and terrorism financing.

Mauritius, the minister added, was committed to assisting and cooperating in combating money laundering and the financing of terrorism in Eastern and Southern Africa. It had encouraged other states to go through the mutual evaluation set up by the Council of Ministers of the member States. In submitting to the evaluation exercise, Mauritius wanted to show its willingness to strengthen its process to fight money laundering activities, but said the evaluation was full of inconsistencies and numerous shortcomings.

As if that were not enough, we now learn that a week ago, global banks acting as custodians for foreign funds including HSBC, Deutsche Bank, Citi, Standard Chartered and JP Morgan shared a list of 25 countries that were tagged as ‘high-risk jurisdictions’” with the Securities And Exchange Board of India. Mauritius, China, the United Arab Emirates (UAE), Cyprus were countries that figured in the list of “high-risk jurisdictions”, according to the Economic Times, India. The others are the Bahamas, Bahrain, Bermuda, British Virgin Islands, Cayman, Channel Islands, Cook Islands, Guernsey, Indonesia, Isle of Man, Jersey, Kuwait, Liechtenstein, Malaysia, Oman, the Philippines, Russia, Saudi Arabia, Thailand, Trinidad and Tobago, and Turkey.

The Mauritius government has complained to India about its inclusion in a list of high-risk countries submitted to the Securities and Exchange Board of India. “Unfortunately, there is no indication on the basis that has been used to include a country in the high-risk category,” Mauritius said in a letter to the Indian High Commission, reports the Economic Times.

“This is regrettable in view of the significant and consistent efforts Mauritius has been making over time to safeguard the credibility of its jurisdiction — efforts which have been recognised by international standard setters such as the OECD (Organisation for Economic Cooperation) and IMF (International Monetary Fund),” the letter said.

We had hoped that, after the upset caused by the revision of the Double Tax Avoidance Agreement between Mauritius and India with far-reaching consequences for the good standing of our global business sector, every effort would be made to put this tax treaty episode behind as Mauritius has to look to the future and re-consolidate ties between the two countries

Putting behind generalisations about presumed malpractices, allegedly through Mauritius, will be a good step in this direction. The continuing cooperation on a sound footing should open up newer opportunities for the two countries to constructively collaborate for peace and security in this part of the world. India’s ambition and legitimate aspiration is to have a say in such geopolitical matters, and Mauritius stands in the position of a strategic partner in this respect.

At the same time, though, Mauritius must take all the steps necessary so as to rectify the negative portrayal coming out of the MER-ESAMLG exercise, and restore the trust and confidence of African partners using all means at its disposal, so that there is no replay of the DTAA episode with India.

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Repetition of Abuses

Lately the government has again appeared not to be projecting itself in much bright light. Since the beginning of its mandate there have been a number of matters which placed the government in a very uncomfortable situation. There were the arbitrary arrests of political adversaries and public officials who had served under the former government (which hopefully is now a thing of the past), the appointment of people close to the holders of power and political cronies in state-owned enterprises. Next were diverse allowances paid to persons close to the ruling party, and ministers’ travels. The number of trips undertaken by each one to different destinations have been used by the opposition to project them as globe-trotters travelling unnecessarily at public expense.

There have also been the different instances of misbehaviour on the part of some MPs, even death threats! As it could be expected, the opposition lost no time in claiming that that these disclosures and the misbehaviour of the MPs are contrary to the kind of discourse the government was holding during the last electoral campaign, namely its pledge to curb the types of abuses made of the public purse by members of the outgoing government and other political appointees. In truth there is no dearth of the latter under any political dispensation. The embarrassment thereby caused is surely not helpful to any government, for it shows that political appointees would be taking undue advantage of their proximity to power at public expense. This has the effect of putting the government on a defensive stance with the perception that it is no better than the predecessors it was castigating. Finally, the most harmful impression that is created is that the reason political parties seek power is only for the sake of all the perks and privileges that come with it.

Added to this are comments regularly being made by some economists and political adversaries about the government’s ineffectiveness in driving the country’s economic agenda three years after winning at the polls. In response to these criticisms of a non-performing government on the economic front, the government has pointed to the vast projects, such as the Metro Express, road infrastructure, sports complexes and medical centres, etc., that are in the works and that will bring economic spin-offs, though there is no longer any mention of a ‘second economic miracle”. To be fair, it was not expected that in the prevailing international economic context, Mauritius would have made vast economic strides. But it must be said that some of the business-busting decisions it made at the start of its mandate haven’t been helpful to bring about confidence among economic operators. All told, its economic performance has indeed been low key.

Beyond projecting such under-performance, there’s a need to have to look at the frustrating political process itself. We have seen successive governments and alliances ejected from power in the past due to a series of reproaches made to them about failings like those above-mentioned. That has not prevented the successor governments from travelling down the same path and being ejected from power in the next elections.

A question arises therefore as to whether the people are bound to put up with abuses made by government members and cronies once a government is elected to power. As the people get dismayed, they then take to the alternative of throwing out the incumbent abusers – but only, alas, to have them replaced, in turn, by the next set of abusers, sometimes camouflaged as a brand-new alliance.

This model of the democratic musical chair keeps bringing us back to the starting point. Voters are left with little choice as to the individual merits among the new actors they have to put up on the political stage each time. The people are forced each time to choose the least bad among the whole lot, but again soon to be disillusioned by abuses.

“This model of the democratic musical chair keeps bringing us back to the starting point. Voters are left with little choice as to the individual merits among the new actors they have to put up on the political stage each time. The people are forced each time to choose the least bad among the whole lot, but again soon to be disillusioned by abuses.”

…that works on a large and small scale countries, liberal or illiberal democracy.